Retirement

The Cost of Procrastination

Presented by Beacon Financial Group

Don't let procrastination keep you from pursuing your financial goals.

Some of us share a common experience. You’re driving along when a police cruiser pulls up behind you with its lights flashing. You pull over, the officer gets out, and your heart drops.

 

“Are you aware the registration on your car has expired?”

 

You’d been meaning to take care of it for some time. For weeks, you had told yourself that you’d go to renew your registration tomorrow, and then, when the morning comes, you repeat it again.

 

Procrastination is avoiding a task that needs to be done – postponing until tomorrow what could be done, today. Procrastinators can sabotage themselves. They often put obstacles in their own path. They may choose paths that hurt their performance.

 

Though Mark Twain famously quipped, “Never put off until tomorrow what you can do the day after tomorrow.” We know that procrastination can be detrimental, both in our personal and professional lives. From the college paper that gets put off to the end of the semester to that important sales presentation that waits until the end of the week for the attention it deserves, we’ve all procrastinated on something.

 

Problems with procrastination in the business world have led to a sizable industry in books, articles, workshops, videos, and other products created to deal with the issue. There are a number of theories about why people procrastinate, but whatever the psychology behind it, procrastination may, potentially, cost money – particularly, when investments and financial decisions are put off.

 

As the example below shows, putting off investing may put off potential returns.

Early Bird. Let’s look at the case of Cindy and Charlie, who each invest a hypothetical $10,000 to start. One of them begins immediately, but the other puts investing off.

 

Charlie begins depositing $10,000 a year in an account that earns a hypothetical 6% rate of return. Then, after 10 years, he stops making deposits. His invested assets, however, are free to keep growing and compounding.

 

While Charlie fills his account, Cindy waits 10 years before getting started. She then starts to invest a hypothetical $10,000 a year for 10 years into an account that also earns a hypothetical 6% rate of return.

Cindy and Charlie have both invested the same $100,000, but procrastination costs Cindy, as Charlie’s balance is much higher at the end of 20 years. Over 20 years, his account has grown to $237,863, while Cindy’s account has only grown to $132,822. Charlie’s account has not only put the power of compound interest to work, it has also allowed the investment returns more time to compound. 1

 

This is a hypothetical example of mathematical compounding. It’s used for comparison purposes only and is not intended to represent the past or future performance of any investment. Taxes and investment costs were not considered in this example. The results are not a guarantee of performance or specific investment advice. The rate of return on investments will vary over time, particularly for longer-term investments. Investments that offer the potential for high returns also carry a high degree of risk. Actual returns will fluctuate. The types of securities and strategies illustrated may not be suitable for everyone.


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

 

 

Citations.

1 - nerdwallet.com/banking/calculator/compound-interest-calculator [12/13/18]

You Could Retire, But Should You?

Presented by Beacon Financial Group

It might be better to wait a bit longer.

Some people retire at first opportunity, only to wish they had waited longer. Your financial strategy likely considers normal financial ups and downs. That said, a big “what if” on your mind might be “what if I retire in a down time that doesn’t swing back upward in a year or two?” It could happen to everyone, and it certainly doesn’t work on your schedule. For that reason, the fact that you can retire doesn’t necessarily mean that you should.

 

Retiring earlier may increase longevity risk. The concern can be put into three dire words: “outliving your money.” Sudden medical expenses, savings shortfalls, financial downturns, and larger-than-planned withdrawals from retirement accounts can all contribute to it. The downside of retiring at 55 or 60 is that you have that many more years of retirement to fund.

 

There are also insurance issues to consider. Medicare will not cover you until you turn 65; in the event of an illness, how would your finances hold up without its availability? While your employer may give you a year-and-a-half of COBRA coverage upon your exit, that could cost your household more than $1,000 a month. 1,2

How is your cash position? If your early retirement happens to coincide with a severe market downturn or a business or health crisis, you will need an emergency fund – or at the very least, enough liquidity to quickly address such issues.

 

Does your spouse want to retire later? If so, your desire to retire early might cause some conflicts and impact any shared retirement dreams you hold. If you have older children or other relatives living with you, how would your decision affect them?  

  

Working a little longer might ease the transition to retirement. Some retirees end up missing the intellectual demands of the workplace and the socialization with friends and coworkers. They find no ready equivalent once they end their careers. Also, it may be difficult to find a part-time job in another field, so staying a while longer could help you make the change at a pace that will be more comfortable, both financially and emotionally. 3

 

Ideally, you will retire with adequate savings and a plan to stay physically and mentally active and socially engaged, so waiting a bit longer to retire might be advantageous to your bottom line.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

«RepresentativeDisclosure» 

 

Citations.

1 - cnbc.com/2019/02/28/what-you-need-to-know-about-medicare.html [2/28/19]
2 - fool.com/personal-finance/2019/02/24/should-you-use-cobra-coverage-when-you-leave-your.aspx [2/24/19]
3 - news.stlpublicradio.org/post/more-older-americans-working-past-65-delaying-retirement [8/8/18]

 

Yes, Young Growing Families Can Save & Invest

Presented by Beacon Financial Group

It may seem like a tall order, but it can be accomplished.

Put yourself steps ahead of your peers. If you have a young, growing family, no doubt your to-do list is pretty long on any given day. Beyond today, you are probably working on another kind of to-do list for the long term. Where does “saving and investing” rank on that list?

 

For some families, it never quite ranks high enough – and it never becomes the priority it should become. Assorted financial pressures, sudden shifts in household needs, bad luck – they can all move “saving and investing” down the list. Even so, young families have strategized to build wealth in the face of such stresses. You can follow their example.

    

First step: put it into numbers. How much money will you need to save by 65 to promote enough retirement income and to live comfortably? Are you on pace to build a retirement nest egg that large? How much risk do you feel comfortable tolerating as you invest?

 

A financial professional can help you arrive at answers to these questions and others. They can help you define long-range retirement savings goals and project the amount of savings and income you may need to sustain your lifestyle as retirees. At that point, “the future” will seem more tangible, and your wealth-building effort, even more purposeful.   

Second step: start today & never stop. If you have already started, congratulations! In getting an early start, you have taken advantage of a young investor’s greatest financial asset: time.

 

If you haven’t started saving and investing, you can do so now. It doesn’t take a huge lump sum to begin. Even if you defer $100 worth of salary into a retirement account per month, you are putting a foot forward. See if you can allocate much more. If you begin when you are young and keep at it, you may witness the awesome power of compounding as you build your retirement savings and net worth through the years. 

 

Of course, this may not be enough, and you may find that you need to devote more than $100 per month to your effort. If you strategize and escalate your savings over time, you may very well generate enough money for a very comfortable retirement.

 

Merely socking away money may not be enough, either. There are a wide variety of choices you can make – perhaps alongside a trusted financial professional – that may help position you and your household for a comfortable future, provided you keep good financial habits along the way. 

How do you find the balance? This is worth addressing – how do you balance saving and investing with attending to your family’s immediate financial needs?

  

Bottom line, you should consider finding money to save and invest for your family’s near-term and long-term goals. Are you spending a lot of money on goods and services you want rather than need? Cut back on that kind of spending. Is credit card debt siphoning away dollars you should assign to saving and investing? Fix that financial leak and avoid paying with plastic whenever you can.

  

Vow to keep “paying yourself first” – maintain the consistency of your saving and investing effort. What is more important: saving for your child’s college education or buying those season tickets? Who comes first in your life: your family or your luxuries? You know the answer. 

   

It has been done; it should be done. There are people who came to this country with little more than the clothes on their backs who have found prosperity. It all starts with belief – the belief that you can do it. Complement that belief with a strategy and regular saving and investing, and you may find yourself much better off much sooner than you think.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Your Financial Strategy

Like a chess grandmaster, it’s worth thinking a few moves ahead.

Presented by Beacon Financial Group

Thinking about retirement might seem unpleasant. As you budget your monthly bills, you might feel as if you simply don’t have enough to handle both your day-to-day affairs and still save for the future. It’s certainly true that it’s a challenge. That said, with some careful thought and a little imagination, you can probably think of ways to make what once felt impossible, more possible.

The strategic approach is known to grandmasters, generals, and sports coaches the world over. Simply put, it’s a matter of looking over your resources and options, then taking steps to use them to your greatest advantage. Strategy doesn’t guarantee any particular outcome, but it can help you make arrangements for all manner of financial situations, both positive and negative. You probably have some questions. That’s good; asking questions and seeking answers is a healthy beginning to a strategy.

Isn’t financial strategy for rich people? Not necessarily. Building that strategy could potentially give you a boost toward a better future for you and those you love. Whether it’s just you, as a single person, or you and your family, giving some thought to your finances could be all that is standing between real life and pursuing a dream. It could also potentially be what prevents a dire financial situation from becoming even worse. All by just thinking a few moves ahead. 1

Am I ready for this? Absolutely. Financial strategy is just a way of thinking ahead. If you’re reading this, you’re already thinking ahead. This means that you may be ready to start thinking about putting money aside for retirement, contemplating insurance choices, setting up beneficiaries, creating or updating a will, and even designating a financial power of attorney and health care proxy as well as drawing up a living will. 2

These topics might seem “far away,” in some distant future, or even fill you with a little anxiety or dread. That anxiety, though, is rooted in the uncertainties in life; you never know what’s coming next. At least with a strategy in action, you have some things in place for your family. If it still seems like too much, it’s good to know that you can reach out to professionals for help.

Do I have to do it all by myself? You have many choices when it comes to building a financial strategy. You could educate yourself and go it alone. It’s certainly cheaper, but you’re probably thinking more about all the things you need to learn and less about all the things you might miss by going the do-it-yourself route. There are also computer-based options, which can be affordable, but you definitely lose the advantages of human help. 2

Finally, there is the financial professional. You might think of a financial professional as a man wearing a green visor, crunching numbers for some cartoon billionaire. The truth is that there are all sorts of financial professionals who specialize in working with people at every income level and from all walks of life. Some financial professionals charge flat rates or by the hour, and others such as fee-only financial professionals typically receive a percentage of client assets under management. 2,3

You have many choices when it comes to who you do business with – your financial professional should be able to talk you through investments, financial issues in the news, working toward your own goals, and ultimately, help you think a few moves ahead.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - nerdwallet.com/blog/investing/5-financial-planning-myths/ [12/7/18]

2 - investors.com/etfs-and-funds/personal-finance/steps-in-financial-planning-2019/ [12/31/18]

3 - thestreet.com/personal-finance/when-is-it-worth-it-to-work-with-a-financial-advisor-14631145 [6/23/18]

Weekly Economic Update 2/4/2019

Presented by Beacon Financial Group

In this week’s recap: a hiring surge, a noteworthy remark from Jerome Powell, a dip for a respected household confidence index, and gains on Wall Street.

February BEGINS WITH SOME EXCELLENT ECONOMIC DATA

Payrolls swelled with 304,000 net new jobs last month, according to the Department of Labor’s February employment report. (A Bloomberg survey of economists had projected a gain of 165,000.) The number of Americans temporarily laid off or working part time for economic reasons increased greatly in January as a consequence of the partial federal government shutdown; that left the unemployment rate (4.0%) and underemployment rate (8.1%) higher. Average hourly wages were up 3.2% year-over-year. Additionally, the factory sector expanded at a faster pace last month: the Institute for Supply Management’s purchasing manager index improved 2.5 points to a mark of 56.6. 1,2

       

FED HINTS AT THE POSSIBILITY OF PAUSING RATE HIKES

The Federal Reserve made no interest rate move last week, but at its January 30 press conference, Fed chairman Jerome Powell had an interesting comment for the media: “We believe we can best support the economy by being patient before making any future adjustment to policy.” To investors large and small, that remark sounded like a declaration that the central bank was ready to exercise extra caution in considering future rate increases. Powell noted the recent emergence of “some crosscurrents and conflicting signals about the [economic] outlook” as a factor. 3

     

HOW ARE CONSUMERS FEELING?

The latest readings on the country’s two most-watched consumer confidence indices look good, but one just took a major fall. The Conference Board’s monthly index went from a December mark of 126.6 to 120.2 in January. In its final January edition, the University of Michigan’s consumer sentiment gauge displayed a 91.2 reading, up 0.5 points from its preliminary version. 2

     

MAJOR INDICES MAKE ANOTHER WEEKLY ADVANCE

Last week, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all gained more than 1.3%, thanks in part to some of the developments mentioned above. The S&P rose 7.87% during January. Oil ended the week at $55.31 on the NYMEX; gold, at $1,322.60 on the COMEX. 4,5

T I P   O F   T H E   W E E K

Does your employer offer long-term disability coverage in its benefits package? Do you know how much income that coverage would pay out if you become disabled? Check to see if the income would be adequate; if it appears inadequate, consider arranging supplemental coverage.

THIS WEEK

Alphabet, Beazer Homes, Clorox, Gilead Sciences, Panasonic, Seagate Technology, Sysco, and The Hartford release earnings news Monday. | On Tuesday, ISM’s January non-manufacturing PMI complements earnings from Allstate, AmeriGas, Anadarko Petroleum, Archer Daniels Midland, BP, Chubb, Electronic Arts, Estee Lauder, Genworth Financial, Mitsubishi, Pitney Bowes, Ralph Lauren, Snap, Viacom, Voya Financial, and Walt Disney Co. | Wednesday, earnings arrive from Chipotle, Cummins, Eli Lilly, General Motors, GlaxoSmithKline, Humana, MetLife, Prudential Financial, Spotify, Take-Two Interactive, and Valvoline; in the evening, Federal Reserve chair Jerome Powell takes questions at a Washington, D.C. town hall meeting. | On Thursday, the earnings roll call includes news from ArcelorMittal, Dunkin’ Brands, Fiat Chrysler, Kellogg, L’Oréal, Marathon Petroleum, Mattel, Motorola Solutions, News Corp., Philip Morris, Twitter, Tyson Foods, and Yum! Brands. | Friday, Exelon, Hasbro, and Phillips 66 present Q4 results.

Q U O T E    O F    T H E    W E E K

“Have patience with all things, but chiefly have patience with yourself.”

St. Francis de Sales

Know someone who could use information like this?

Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.  Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

CITATIONS:

1 - fortune.com/2019/02/01/jobs-numbers-january/ [2/1/19]

2 - marketwatch.com/economy-politics/calendars/economic [2/1/19]

3 - washingtonpost.com/business/2019/01/30/federal-reserve-says-it-will-be-patient-rate-hikes-change-likely-please-trump/ [1/30/19]

4 - markets.wsj.com [2/1/19]

5 - us.spindices.com/indices/equity/sp-500 [1/31/19]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [2/1/19]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/1/19]

Are Your Beneficiary Designations Up to Date?

Presented by Beacon Financial Group

Who should inherit your IRA or 401(k)? See that they do

Here’s a simple financial question: who is the beneficiary of your IRA? How about your 401(k) or annuity? You may be saying, “I’m not sure.” It is smart to periodically review your beneficiary designations.

Your choices may need to change with the times. When did you open your first IRA? When did you buy your life insurance policy? Was it back in the Nineties? Are you still living in the same home and working at the same job as you did back then? Have your priorities changed?

While your beneficiary choices may seem obvious and rock‐solid when you initially make them, time has a way of altering things. In a stretch of five or ten years, some major changes can occur in your life and may warrant changes in your beneficiary decisions.

In fact, you might want to review them annually. Here’s why: companies frequently change custodians when it comes to retirement plans and insurance policies. When a new custodian comes on board, a beneficiary designation can get lost in the paper shuffle. (It has happened.) If you don’t have a designated beneficiary on your retirement accounts, those assets may go to the “default” beneficiaries when you pass away, which might throw a wrench into your estate planning. An example: under ERISA, your spouse receives your 401(k) assets if you pass away. Your spouse must waive that privilege in writing for those assets to go to your children instead. 1

How your choices affect your loved ones. The beneficiary of your IRA, annuity, 401(k), or life insurance policy may be your spouse, your child, maybe another loved one, or maybe even an institution. Naming a beneficiary helps to keep these assets out of probate when you pass away.

Many people do not realize that beneficiary designations take priority over bequests made in a will or living trust. For example, if you long ago named a son or daughter who is now estranged from you as the beneficiary of your life insurance policy, he or she will receive the death benefit when you die, regardless of what your will states. 2

You may have even chosen the “smartest financial mind” in your family as your beneficiary, thinking that he or she has the knowledge to carry out your financial wishes in the event of your death. But what if this person passes away before you do? What if you change your mind about the way you want your assets distributed and are unable to communicate your intentions in time? And what if he or she inherits tax problems as a result of receiving your assets?

How your choices affect your estate. If you are naming your spouse as your beneficiary, the tax consequences are less thorny. Assets you inherit from your spouse aren’t subject to estate tax, as long as you are a U.S. citizen. 3

When the beneficiary isn’t your spouse, things get a little more complicated – for your estate and for your beneficiary’s estate. If you name, for example, your son or your sister as the beneficiary of your retirement plan assets, the amount of those assets will be included in the value of your taxable estate. (This might mean a higher estate tax bill for your heirs.) And the problem will persist: when your non‐spouse beneficiary inherits those retirement plan assets, those assets become part of their taxable estate, and their heirs might face higher estate taxes. Your non‐spouse heir might also have to take required income distributions from that retirement plan someday and pay the required taxes on that income. 4

If you properly designate a charity or other 501(c)(3) non‐profit organization as a beneficiary of your retirement account assets, the assets can pass to the charity without your estate being taxed, and the gift will be deductible for estate tax purposes. 5

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note ‐ investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 ‐ forbes.com/sites/ashleaebeling/2018/01/08/five‐retirement‐housekeeping‐moves‐for‐the‐new‐year/ [1/8/18]

2 ‐ thebalance.com/why‐beneficiary‐designations‐override‐your‐will‐2388824 [8/28/17]

3 ‐ nolo.com/legal‐encyclopedia/estate‐planning‐when‐you‐re‐married‐noncitizen.html [2/4/18]

4 ‐ corporate.findlaw.com/law‐library/who‐should‐be‐the‐beneficiary‐of‐your‐qualified‐retirement‐plan.html [2/4/18]

5 ‐ ameriprise.com/research‐market‐insights/financial‐articles/insurance‐estate‐planning/charitable‐giving/ [2/4/18]

Traditional vs. Roth IRAs

Perhaps both traditional and Roth IRAs can play a part in your retirement plans

IRAs can be an important tool in your retirement savings belt, and whichever you choose to open could have a significant impact on how those accounts might grow.

IRAs, or Individual Retirement Accounts, are tax advantage accounts used to help save money for retirement. There are two different types of IRAs: traditional and Roth. Traditional IRAs, created in 1974, are owned by roughly 35.1 million U.S. households. And Roth IRAs, created as part of the Taxpayer Relief Act in 1997, are owned by nearly 24.9 million households. 1

Both kinds of IRAs share many similarities, and yet, each is quite different. Let's take a closer look.

Up to certain limits, traditional IRAs allow individuals to make tax-deductible contributions into the retirement account. Distributions from traditional IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. For individuals covered by a retirement plan at work, the deduction for a traditional IRA in 2019 has been phased out for incomes between $103,000 and $123,000 for married couples filing jointly and between $64,000 and $74,000 for single filers. 2,3

Also, within certain limits, individuals can make contributions to a Roth IRA with after-tax dollars. To qualify for a tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Like a traditional IRA, contributions to a Roth IRA are limited based on income. For 2019, contributions to a Roth IRA are phased out between $193,000 and $203,000 for married couples filing jointly and between $122,000 and $137,000 for single filers. 2,3

In addition to contribution and distribution rules, there are limits on how much can be contributed to either IRA. In fact, these limits apply to any combination of IRAs; that is, workers cannot put more than $6,000 per year into their Roth and traditional IRAs combined. So, if a worker contributed $3,500 in a given year into a traditional IRA, contributions to a Roth IRA would be limited to $2,500 in that same year. 4

Individuals who reach age 50 or older by the end of the tax year can qualify for annual “catchup” contributions of up to $1,000. So, for these IRA owners, the 2019 IRA contribution limit is $7,000. 4

If you meet the income requirements, both traditional and Roth IRAs can play a part in your retirement plans. And once you’ve figured out which will work better for you, only one task remains: opening an account.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - https://www.ici.org/pdf/per23-10.pdf [12/17]

2 - https://www.marketwatch.com/story/gearing-up-for-retirement-make-sure-you-understand-your-tax-obligations-2018-06-14 [6/14/18]

3 - https://money.usnews.com/money/retirement/articles/new-401-k-and-ira-limits [11/12/18]

4 - https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits [11/2/18]

A Retirement Fact Sheet

Some specifics about the “second act.”

Does your vision of retirement align with the facts? Here are some noteworthy financial and lifestyle facts about life after 50 that might surprise you.

Up to 85% of a retiree’s Social Security income can be taxed. Some retirees are taken aback when they discover this. In addition to the Internal Revenue Service, 13 states levy taxes on some or all Social Security retirement benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia. (It is worth mentioning that the I.R.S. offers free tax advice to people 60 and older through its Tax Counseling for the Elderly program.)1

Retirees get a slightly larger standard deduction on their federal taxes. Actually, this is true for all taxpayers aged 65 and older, whether they are retired or not. Right now, the standard deduction for an individual taxpayer in this age bracket is $13,600, compared to $12,000 for those 64 or younger.2

Retirees can still use IRAs to save for retirement. There is no age limit for contributing to a Roth IRA, just an inflation-adjusted income limit. So, a retiree can keep directing money into a Roth IRA for life, provided they are not earning too much. In fact, a senior can potentially contribute to a traditional IRA until the year they turn 70½.1

A significant percentage of retirees are carrying education and mortgage debt. The Consumer Finance Protection Bureau says that throughout the U.S., the population of borrowers aged 60 and older who have outstanding student loans grew by at least 20% in every state between 2012 and 2017. In more than half of the 50 states, the increase was 45% or greater. Generations ago, seniors who lived in a home often owned it, free and clear; in this decade, that has not always been so. The Federal Reserve’s recent Survey of Consumer Finance found that more than a third of those aged 65-74 have outstanding home loans; nearly a quarter of Americans who are 75 and older are in the same situation.1

As retirement continues, seniors become less credit dependent. GoBankingRates says that only slightly more than a quarter of Americans over age 75 have any credit card debt, compared to 42% of those aged 65-74.1

About one in three seniors who live independently also live alone. In fact, the Institute on Aging notes that nearly half of women older than age 75 are on their own. Compared to male seniors, female seniors are nearly twice as likely to live without a spouse, partner, family member, or roommate.1

Around 64% of women say that they have no “Plan B” if forced to retire early. That is, they would have to completely readjust and reassess their vision of retirement, and redetermine their sources of retirement income. The Transamerica Center for Retirement Studies learned this from its latest survey of more than 6,300 U.S. workers.3

Few older Americans budget for travel expenses. While retirees certainly love to travel, Merril Lynch found that roughly two-thirds of people aged 50 and older admitted that they had never earmarked funds for their trips, and only 10% said they had planned their vacations extensively.1

What financial facts should you consider as you retire? What monetary realities might you need to acknowledge as your retirement progresses from one phase to the next? The reality of retirement may surprise you. If you have not met with a financial professional about your retirement savings and income needs, you may wish to do so. When it comes to retirement, the more information you have, the better.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - gobankingrates.com/retirement/planning/weird-things-about-retiring/ [8/6/18]

2 - fool.com/taxes/2018/04/15/2018-standard-deduction-how-much-it-is-and-why-you.aspx [4/15/18]

3 - thestreet.com/retirement/18-facts-about-womens-retirement-14558073 [4/17/18]

Getting Your Personal Finances in Shape for 2019

Fall is a good time to assess where you stand and where you could be

You need not wait for 2019 to plan improvements to your finances. You can begin now. The

last few months of 2018 give you a prime time to examine critical areas of your budget, your

credit, and your investments.

You could work on your emergency fund (or your rainy day fund). To clarify, an emergency

fund is the money you store in reserve for unforeseen financial disruptions; a rainy day fund is

money saved for costs you anticipate will occur. A strong emergency fund contains the

equivalent of a few months of salary, maybe even more; a rainy day fund could contain as little

as a few hundred dollars.

Optionally, you could hold this money in a high-yield savings account. A little searching may

lead to a variety of choices; here in September, it is not hard to find accounts offering 1.5% or

more annual interest, as opposed to the common 0.1% or less. Remember that a high-yield

savings account is intended as a place to park money; if you make regular deposits and

withdrawals to and from it and treat it like a checking account, you may incur fees that

diminish the savings progress you make.1

Review your credit score. Federal law entitles you to a free copy of your credit report at each

of the three nationwide credit reporting firms (Equifax, TransUnion, and Experian) every 12

months. Now is as good a time as any to request these reports; visit annualcreditreport.com or

call 1-877-322-8228 to order them. At the very least, you will learn your credit score. You may

also detect errors and mistakes that might be harming your credit rating.2

Think about the way you are saving for major financial goals. Has your financial situation

improved in 2018, to the extent that you could contribute a little more money to an IRA or a

workplace retirement plan now or next year? If you are not contributing enough at work to

receive a matching contribution from your employer, maybe now you can.

Also, consider the way your invested assets are held. What are your current and future

allocations? Some people have heavy concentrations of equities in their workplace retirement

plan, IRA, or brokerage account due to Wall Street’s long bull market. If this is true for you,

there may be some pain when the next bear market begins. Check in on your portfolio while

things are still bullish.

Can you spend less in 2019? That might be a key to saving more and putting more money into

your rainy day or emergency funds. If your pay has increased, your discretionary spending

does not necessarily have to increase with it. See if you can find room in your budget to

possibly cut an expense and redirect the money into savings or investments.

You may also want to set some near-term financial goals for yourself. Whether you want

to accomplish in 2019 what you did not quite do in 2018, or further the positive financial trends

underway in your life, now is the time to look forward and plan.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are un-managed and are not illustrative of any particular

investment.

«RepresentativeDisclosure»

Citations.

1 - thesimpledollar.com/best-high-interest-savings-accounts/ [8/31/18]

2 - ftc.gov/faq/consumer-protection/get-my-free-credit-report [9/6/18]

Your 2019 Financial To-Do List

Things you can do for your future as the year unfolds.

What financial, business, or life priorities do you need to address for 2019? Now is a good time

to think about the investing, saving, or budgeting methods you could employ toward specific

objectives, from building your retirement fund to lowering your taxes. You have plenty of

options. Here are a few that might prove convenient.

Can you contribute more to your retirement plans this year? In 2019, the yearly

contribution limit for a Roth or traditional IRA rises to $6,000 ($7,000 for those making “catch-

up” contributions). Your modified adjusted gross income (MAGI) may affect how much you can

put into a Roth IRA: singles and heads of household with MAGI above $137,000 and joint filers

with MAGI above $203,000 cannot make 2019 Roth contributions.1

For tax year 2019, you can contribute up to $19,000 to 401(k), 403(b), and most 457 plans,

with a $6,000 catch-up contribution allowed if you are age 50 or older. If you are self-

employed, you may want to look into whether you can establish and fund a solo 401(k) before

the end of 2019; as employer contributions may also be made to solo 401(k)s, you may direct

up to $56,000 into one of those plans.1

Your retirement plan contribution could help your tax picture. If you won’t turn 70½ in 2019

and you participate in a traditional qualified retirement plan or have a traditional IRA, you can

cut your taxable income through a contribution. Should you be in the new 24% federal tax

bracket, you can save $1,440 in taxes as a byproduct of a $6,000 traditional IRA contribution.2

What are the income limits on deducting traditional IRA contributions? If you participate in a

workplace retirement plan, the 2019 MAGI phase-out ranges are $64,000-$74,000 for singles

and heads of households, $103,000-$123,000 for joint filers when the spouse making IRA

contributions is covered by a workplace retirement plan, and $193,000-$203,000 for an IRA

contributor not covered by a workplace retirement plan, but married to someone who is.1

Roth IRAs and Roth 401(k)s, 403(b)s, and 457 plans are funded with after-tax dollars, so you

may not take an immediate federal tax deduction for your contributions to them. The upside is

that if you follow I.R.S. rules, the account assets may eventually be withdrawn tax free.3

Your tax year 2019 contribution to a Roth or traditional IRA may be made as late as the 2020

federal tax deadline – and, for that matter, you can make a 2018 IRA contribution as late as

April 15, 2019, which is the deadline for filing your 2018 federal return. There is no merit in

waiting until April of the successive year, however, since delaying a contribution only delays

tax-advantaged compounding of those dollars.1,3

Should you go Roth in 2019? You might be considering that if you only have a traditional IRA.

This is no snap decision; the Internal Revenue Service no longer gives you a chance to undo it,

and the tax impact of the conversion must be weighed versus the potential future benefits. If

you are a high earner, you should know that income phase-out limits may affect your chance to

make Roth IRA contributions. For 2019, phase-outs kick in at $193,000 for joint filers and

$122,000 for single filers and heads of household. Should your income prevent you from

contributing to a Roth IRA at all, you still have the chance to contribute to a traditional IRA in

2019 and go Roth later.1,4

Incidentally, a footnote: distributions from certain qualified retirement plans, such as 401(k)s,

are not subject to the 3.8% Net Investment Income Tax (NIIT) affecting single/joint filers with

MAGIs over $200,000/$250,000. If your MAGI does surpass these thresholds, then dividends,

royalties, the taxable part of non-qualified annuity income, taxable interest, passive income

(such as partnership and rental income), and net capital gains from the sale of real estate and

investments are subject to that surtax. (Please note that the NIIT threshold is just $125,000

for spouses who choose to file their federal taxes separately.)5

Consult a tax or financial professional before you make any IRA moves to see how those

changes may affect your overall financial picture. If you have a large, traditional IRA, the

projected tax resulting from a Roth conversion may make you think twice.

What else should you consider in 2019? There are other things you may want to do or review.

Make charitable gifts. The individual standard deduction rises to $12,000 in 2019, so there

will be less incentive to itemize deductions for many taxpayers – but charitable donations are

still deductible if they are itemized. If you plan to gift more than $12,000 to qualified charities

and non-profits in 2019, remember that the paper trail is important.6

If you give cash, you need to document it. Even small contributions need to be demonstrated

by a bank record or a written communication from the charity with the date and amount.

Incidentally, the I.R.S. does not equate a pledge with a donation. You must contribute to a

qualified charity to claim a federal charitable tax deduction. Incidentally, the Tax Cuts and Jobs

Act lifted the ceiling on the amount of cash you can give to a charity per year – you can now

gift up to 60% of your adjusted gross income in cash per year, rather than 50%.6,7

What if you gift appreciated securities? If you have owned them for more than a year, you will

be in line to take a deduction for 100% of their fair market value and avoid capital gains tax

that would have resulted from simply selling the investment and donating the proceeds. The

nonprofit organization gets the full amount of the gift, and you can claim a deduction of up to

30% of your adjusted gross income.8

Does the value of your gift exceed $250? It may, and if you gift that amount or larger to a

qualified charitable organization, you should ask that charity or non-profit group for a receipt.

You should always request a receipt for a cash gift, no matter how large or small the amount.8

If you aren’t sure if an organization is eligible to receive charitable gifts, check it out at

IRS.GOV/Charities-&-Non-Profits/Exempt-Organizations-Select-Check.

Open an HSA. If you are enrolled in a high-deductible health plan, you may set up and fund a

Health Savings Account in 2019. You can make fully tax-deductible HSA contributions of up to

$3,500 (singles) or $7,000 (families); catch-up contributions of up to $1,000 are permitted for

those 55 or older. HSA assets grow tax deferred, and withdrawals from these accounts are tax

free if used to pay for qualified health care expenses.9

Practice tax-loss harvesting. By selling depreciated shares in a taxable investment account,

you can offset capital gains or up to $3,000 in regular income ($1,500 is the annual limit for

married couples who file separately). In fact, you may use this tactic to offset all your total

capital gains for a given tax year. Losses that exceed the $3,000 yearly limit may be rolled

over into 2020 (and future tax years) to offset ordinary income or capital gains again.10

Pay attention to asset location. Tax-efficient asset location is an ignored fundamental of

investing. Broadly speaking, your least tax-efficient securities should go in pre-tax accounts,

and your most tax-efficient securities should be held in taxable accounts.

Review your withholding status. You may have updated it last year when the I.R.S. introduced

new withholding tables; you may want to adjust for 2019 due to any of the following factors.

* You tend to pay a great deal of income tax each year.

* You tend to get a big federal tax refund each year.

* You recently married or divorced.

* A family member recently passed away.

* You have a new job, and you are earning much more than you previously did.

* You started a business venture or became self-employed.

Are you marrying in 2019? If so, why not review the beneficiaries of your workplace

retirement plan account, your IRA, and other assets? In light of your marriage, you may want to

make changes to the relevant beneficiary forms. The same goes for your insurance coverage. If

you will have a new last name in 2019, you will need a new Social Security card. Additionally,

the two of you, no doubt, have individual retirement saving and investment strategies. Will

they need to be revised or adjusted once you are married?

Are you coming home from active duty? If so, go ahead and check the status of your credit

and the state of any tax and legal proceedings that might have been preempted by your

orders. Make sure any employee health insurance is still in place. Revoke any power of attorney

you may have granted to another person.

Consider the tax impact of any upcoming transactions. Are you planning to sell (or buy) real

estate next year? How about a business? Do you think you might exercise a stock option in the

coming months? Might any large commissions or bonuses come your way in 2019? Do you

anticipate selling an investment that is held outside of a tax-deferred account? Any of these

actions might significantly impact your 2019 taxes.

If you are retired and older than 70½, remember your year-end RMD. Retirees over age

70½ must begin taking Required Minimum Distributions from traditional IRAs, 401(k)s, SEP IRAs,

and SIMPLE IRAs by December 31 of each year. The I.R.S. penalty for failing to take an RMD

equals 50% of the RMD amount that is not withdrawn.4,11

If you turned 70½ in 2018, you can postpone your initial RMD from an account until April 1,

2019. All subsequent RMDs must be taken by December 31 of the calendar year to which the

RMD applies. The downside of delaying your 2018 RMD into 2019 is that you will have to take

two RMDs in 2019, with both RMDs being taxable events. You will have to make your 2018 tax

year RMD by April 1, 2019, and then take your 2019 tax year RMD by December 31, 2019.11

Plan your RMDs wisely. If you do so, you may end up limiting or avoiding possible taxes on

your Social Security income. Some Social Security recipients don’t know about the “provisional

income” rule – if your adjusted gross income, plus any non-taxable interest income you earn,

plus 50% of your Social Security benefits surpasses a certain level, then some Social Security

benefits become taxable. Social Security benefits start to be taxed at provisional income levels

of $32,000 for joint filers and $25,000 for single filers.11

Lastly, should you make 13 mortgage payments in 2019? There may be some merit to

making a January 2020 mortgage payment in December 2019. If you have a fixed-rate loan, a

lump- sum payment can reduce the principal and the total interest paid on it by that much

more.

Talk with a qualified financial or tax professional today. Vow to focus on being healthy and wealthy in 2019.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell

any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any

particular investment.

«RepresentativeDisclosure»

Citations.

1 - forbes.com/sites/ashleaebeling/2018/11/01/irs-announces-2019-retirement-plan-contribution-limits-for-401ks-and-more [11/1/18]

2 - irs.com/articles/2018-federal-tax-rates-personal-exemptions-and-standard-deductions [11/2/17]

3 - irs.gov/Retirement-Plans/Traditional-and-Roth-IRAs [7/10/18]

4 - forbes.com/sites/bobcarlson/2018/10/26/7-ira-strategies-for-year-end-2018/ [10/26/18]

5 - irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax [6/18/18]

6 - crainsdetroit.com/philanthropy/what-donors-need-know-about-tax-reform [10/21/18]

7 - thebalance.com/tax-deduction-for-charity-donations-3192983 [7/25/18]

8 - schwab.com/resource-center/insights/content/charitable-donations-the-basics-of-giving [7/2/18]

9 - kiplinger.com/article/insurance/T027-C001-S003-health-savings-account-limits-for-2019.html [8/28/18]

10 - schwab.com/resource-center/insights/content/reap-benefits-tax-loss-harvesting-to-lower-your-tax-bill [10/7/18]

11 - fool.com/retirement/2018/01/29/5-things-to-consider-before-tapping-your-retiremen.aspx [1/29/18]

End-of-the-Year Money Moves

Here are some things you might want to do before saying goodbye to 2018

What has changed for you in 2018? Did you start a new job or leave a job behind? Did you

retire? Did you start a family? If notable changes occurred in your personal or professional life,

then you will want to review your finances before this year ends and 2019 begins. Even if your

2018 has been relatively uneventful, the end of the year is still a good time to get cracking and

see where you can plan to save some taxes and/or build a little more wealth.

Do you practice tax-loss harvesting? That is the art of taking capital losses (selling securities

worth less than what you first paid for them) to offset your short-term capital gains. If you fall

into one of the upper tax brackets, you might want to consider this move, which directly lowers

your taxable income. It should be made with the guidance of a financial professional you trust.1

In fact, you could even take it a step further. Consider that up to $3,000 of capital losses in

excess of capital gains can be deducted from ordinary income, and any remaining capital

losses above that can be carried forward to offset capital gains in upcoming years. When you

live in a high-tax state, this is one way to defer tax.1

Do you want to itemize deductions? You may just want to take the standard deduction for

2018, which has ballooned to $12,000 for single filers and $24,000 for joint filers because of

the Tax Cuts & Jobs Act. If you do think it might be better for you to itemize, now would be a

good time to get the receipts and assorted paperwork together. While many miscellaneous

deductions have disappeared, some key deductions are still around: the state and local tax

(SALT) deduction, now capped at $10,000; the mortgage interest deduction; the deduction for

charitable contributions, which now has a higher limit of 60% of adjusted gross income; and

the medical expense deduction.2,3

Could you ramp up 401(k) or 403(b) contributions? Contribution to these retirement plans

lower your yearly gross income. If you lower your gross income enough, you might be able to

qualify for other tax credits or breaks available to those under certain income limits. Note that

contributions to Roth 401(k)s and Roth 403(b)s are made with after-tax rather than pre-tax

dollars, so contributions to those accounts are not deductible and will not lower your taxable

income for the year. They will, however, help to strengthen your retirement savings.4

Are you thinking of gifting? How about donating to a qualified charity or non-profit

organization before 2018 ends? In most cases, these gifts are partly tax deductible. You must

itemize deductions using Schedule A to claim a deduction for a charitable gift.5

If you donate publicly traded shares you have owned for at least a year, you can take a

charitable deduction for their fair market value and forgo the capital gains tax hit that would

result from their sale. If you pour some money into a 529 college savings plan on behalf of a

child in 2018, you may be able to claim a full or partial state income tax deduction (depending

on the state).2,6

Of course, you can also reduce the value of your taxable estate with a gift or two. The federal

gift tax exclusion is $15,000 for 2018. So, as an individual, you can gift up to $15,000 to as

many people as you wish this year. A married couple can gift up to $30,000 in 2018 to as many

people as they desire.7

While we’re on the topic of estate planning, why not take a moment to review the beneficiary

designations for your IRA, your life insurance policy, and workplace retirement plan? If you

haven’t reviewed them for a decade or more (which is all too common), double-check to see

that these assets will go where you want them to go, should you pass away. Lastly, look at

your will to see that it remains valid and up-to-date.

Should you convert all or part of a traditional IRA into a Roth IRA? You will be withdrawing

money from that traditional IRA someday, and those withdrawals will equal taxable income.

Withdrawals from a Roth IRA you own are not taxed during your lifetime, assuming you follow

the rules. Translation: tax savings tomorrow. Before you go Roth, you do need to make sure you

have the money to pay taxes on the conversion amount. A Roth IRA conversion can no longer

be recharacterized (reversed).8

Can you take advantage of the American Opportunity Tax Credit? The AOTC allows

individuals whose modified adjusted gross income is $80,000 or less (and joint filers with

MAGI of $160,000 or less) a chance to claim a credit of up to $2,500 for qualified college

expenses. Phase-outs kick in above those MAGI levels.9

See that you have withheld the right amount. The Tax Cuts & Jobs Act lowered federal

income tax rates and altered withholding tables. If you discover that you have withheld too

little on your W-4 form so far in 2018, you may need to adjust your withholding before the year

ends. The Government Accountability Office projects that 21% of taxpayers are withholding

less than they should in 2018. Even an end-of-year adjustment has the potential to save you

some tax.10 Talk with a financial or tax professional now rather than in February or March.

Little year-end moves might help you improve your short-term and long-term financial

situation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell

any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any

particular investment.

«RepresentativeDisclosure»

Citations.

1 - nerdwallet.com/blog/investing/just-how-valuable-is-daily-tax-loss-harvesting/ [4/16/18]

2 - marketwatch.com/story/how-to-game-the-new-standard-deduction-and-3-other-ways-to-cut-your-2018-tax-bill-2018-10-15 [10/15/18]

3 - hrblock.com/tax-center/irs/tax-reform/3-changes-itemized-deductions-tax-reform-bill/ [10/10/18]

4 - investopedia.com/articles/retirement/06/addroths.asp [2/2/18]

5 - investopedia.com/articles/personal-finance/041315/tips-charitable-contributions-limits-and-taxes.asp [10/1/18]

6 - savingforcollege.com/article/how-much-is-your-state-s-529-plan-tax-deduction-really-worth [9/27/18]

7 - fool.com/retirement/2018/06/28/5-things-you-might-not-know-about-the-estate-tax.aspx [6/28/18]

8 - marketwatch.com/story/how-the-new-tax-law-creates-a-perfect-storm-for-roth-ira-conversions-2018-03-26 [9/15/18]

9 - fool.com/investing/2018/03/17/your-2018-guide-to-college-tuition-tax-breaks.aspx [3/17/18]

10 - money.usnews.com/money/personal-finance/taxes/articles/2018-10-16/should-you-adjust-your-income-tax-withholding [10/16/18]

Is Generation X Preparing Adequately for Retirement?

Future financial needs may be underestimated

If you were born during 1965-80, you belong to “Generation X.” Ten or twenty years ago,

you may have thought of retirement as an event in the lives of your parents or grandparents;

within the next 10-15 years, you will probably be thinking about how your own retirement will

unfold.1

According to the most recent annual retirement survey from the Transamerica Center for

Retirement Studies, the average Gen Xer has saved only about $72,000 for retirement.

Hypothetically, how much would that $72,000 grow in a tax-deferred account returning 6%

over 15 years, assuming ongoing monthly contributions of $500? According to the compound

interest calculator at Investor.gov, the answer is $312,208. Across 20 years, the projection is

$451,627.2,3

Should any Gen Xer retire with less than $500,000? Today, people are urged to save $1

million (or more) for retirement; $1 million is being widely promoted as the new benchmark,

especially for those retiring in an area with high costs of living. While a saver aged 38-53 may

or may not be able to reach that goal by age 65, striving for it has definite merit.4

Many Gen Xers are staring at two retirement planning shortfalls. Our hypothetical Gen Xer

directs $500 a month into a retirement account. This might be optimistic: Gen Xers contribute

an average of 8% of their pay to retirement plans. For someone earning $60,000, that means

just $400 a month. A typical Gen X worker would do well to either put 10% or 15% of his or her

salary toward retirement savings or simply contribute the maximum to retirement accounts, if

income or good fortune allows.2

How many Gen Xers have Health Savings Accounts (HSAs)? These accounts set aside a distinct

pool of money for medical needs. Unlike Flexible Spending Accounts (FSAs), HSAs do not have

to be drawn down each year. Assets in an HSA grow with taxes deferred, and if a distribution

from the HSA is used to pay qualified health care expenses, that money comes out of the

account, tax free. HSAs go hand-in-hand with high-deductible health plans (HDHPs), which

have lower premiums than typical health plans. A taxpayer with a family can contribute up to

$7,000 to an HSA in 2019. (The limit is $8,000 if that taxpayer will be 55 or older at any time

next year.) HSA contributions also reduce taxable income.2,5

Fidelity Investments projects that the average couple will pay $280,000 in health care

expenses after age 65. A particular retiree household may pay more or less, but no one can

deny that the costs of health care late in life can be significant. An HSA provides a dedicated,

tax-advantaged way to address those expenses early.6

Retirement is less than 25 years away for most of the members of Generation X. For

some, it is less than a decade away. Is this generation prepared for the financial realities of life

after work? Traditional pensions are largely gone, and Social Security could change in the

decades to come. At midlife, Gen Xers must dedicate themselves to sufficiently funding their

retirements and squarely facing the financial challenges ahead.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular

investment.

«RepresentativeDisclosure»

Citations.

1 - businessinsider.com/generation-you-are-in-by-birth-year-millennial-gen-x-baby-boomer-2018-3 [4/19/18]

2 - forbes.com/sites/megangorman/2018/05/27/generation-x-our-top-2-retirement-planning-priorities/ [5/27/18]

3 - investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator [11/8/18]

4 - washingtonpost.com/news/get-there/wp/2018/04/26/is-1-million-enough-to-retire-why-this-benchmark-is-both-real-and-unrealistic [4/26/18]

5 - kiplinger.com/article/insurance/T027-C001-S003-health-savings-account-limits-for-2019.html [8/28/18]

6 - fool.com/retirement/2018/11/05/3-reasons-its-not-always-a-good-idea-to-retire-ear.aspx [11/5/18]

Investing Means Tolerating Some Risk

That truth must always be recognized.

When financial markets have a bad day, week, or month, discomforting headlines and data can

swiftly communicate a message to retirees and retirement savers alike: equity investments are

risky things, and Wall Street is a risky place.

All true. If you want to accumulate significant retirement savings or try and grow your wealth

through the opportunities in the markets, this is a reality you cannot avoid.

Regularly, your investments contend with assorted market risks. They never go away. At

times, they may seem dangerous to your net worth or your retirement savings, so much so that

you think about getting out of equities entirely.

If you are having such thoughts, think about this: in the big picture, the real danger to your

retirement could be being too risk averse.

Is it possible to hold too much in cash? Yes. Some pre-retirees do. (Even some retirees, in fact.)

Some have six-figure savings accounts, built up since the Great Recession and the last bear

market. They may feel this is a prudent move with the thought that a dollar will always be

worth a dollar in America, and that the money is out of the market and backed by deposit

insurance.

This is all well and good, but the problem is the earning potential. Even with interest rates

rising, many high-balance savings accounts are currently yielding less than 0.5% a year. The

latest inflation data shows consumer prices advancing 2.3% a year. The data suggests the

money in the bank is not outrunning inflation and may likely lose purchasing power over

time.

Consider some of the recent yearly advances of the S&P 500. In 2016, it gained 9.54%; in

2017, it gained 19.42%. Those were the price returns; the 2016 and 2017 total returns (with

dividends reinvested) were a respective 11.96% and 21.83%.

Yes, the broad benchmark for U.S. equities has bad years as well. Historically, it has had about

one negative year for every three positive years. Looking through relatively recent historical

windows, the positives have mostly outweighed the negatives for investors. From 1973-2016,

for example, the S&P gained an average of 11.69% per year. (The last 3-year losing streak the

S&P had was in 2000-02.)

Your portfolio may not return as well as the S&P does in a given year, but when equities rally,

your household may see its invested assets grow noticeably. When you bring in equity

investment account factors like compounding and tax deferral, the growth of those invested

assets over decades may dwarf the growth that could result from mere checking or savings

account interest.

At some point, putting too little into investments and too much in the bank may become a risk

– a risk to your retirement savings potential. At today’s interest rates, the money you are

saving may end up growing faster if it is invested in some vehicle offering potentially greater

reward and comparatively greater degrees of risk to tolerate.

Having an emergency fund is good. You can dip into that liquid pool of cash to address

sudden financial issues that pose risks to your financial equilibrium in the present.

Having a retirement fund is even better. When you have one of those, you may confidently

address the risk of outliving your money in the future.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are unmanaged and cannot be invested into directly.

Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any

investment.

«RepresentativeDisclosure»

Citations.

1 - valuepenguin.com/average-savings-account-interest-rates [10/4/18]

2 - investing.com/economic-calendar/ [10/11/18]

3 - money.cnn.com/data/markets/sandp/ [10/11/18]

4 - ycharts.com/indicators/sandp_500_total_return_annual [10/11/18]

5 - thebalance.com/stock-market-returns-by-year-2388543 [6/23/18]

What are the Elements of a Healthy Financial Plan?

One of the most important things you can do for yourself and your family is to develop and stick to a financial plan. In doing so, it is strongly recommended that you consult an experienced financial planner who can help you understand your current situation, identify your goals, and put strategies in place to reach those goals. Regardless of your individual goals-whether to live a comfortable retirement, educate your children, travel the world, live a debt-free life, or leave your loved ones a significant inheritance-the foundation of any healthy financial plan must encompass strategies for building wealth and strategies for protecting your wealth.

 

Strategies to Save and Build Wealth

There are two distinctive types of savings to which a healthy financial plan gives consideration.

Cash Reserve - Establish a cash reserve for larger purchases, vacations and emergency situations, e.g., job loss, car/house repairs, etc. Your cash reserve is the money by which you live. A fully-funded cash reserve-approximately three month's salary-gives you the ability to handle unforeseen expenses and plan for the things you want to buy and do, without threatening your monthly expenses or investments. A financial planner can help you establish a cash management plan to maximize your discretionary income (after bills), prepare for emergencies, and save for the things you want.

Investment Portfolio - The second type of savings plan is an investment portfolio-the money by which you grow. An investment portfolio is absolutely essential to your meeting your long-term financial security goals. There are many factors that should be considered when establishing an investment portfolio, including how much you will need to retire, how much you expect your pension and/or Social Security to contribute, how many years until your retirement, and so on. With this information, your financial planner will help you make the right kind of investments.

 

Strategies to Protect Savings and Investments

A new transmission for your car or having to replace a leaky roof will probably not put you into financial ruin, especially if you have a fully-funded cash reserve. However, disability and death have the potential to wipe out your entire savings and retirement income very quickly. In addition to the standard insurances that most people carry, e.g., health, auto, homeowners, etc., the following types of insurances are critical to a healthy financial plan.

Life Insurance - Life insurance protects those who depend on your income - your spouse, children, etc. Upon your death, your life insurance policy will pay your beneficiary a lump sum that can replace your lost income, pay off outstanding expenses (house, car), cover funeral expenses and/or provide an education for your children. The various types of life insurances will be explored in a future article.

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Disability Insurance - Disability insurance is often one of the most overlooked forms of insurance, but is extremely beneficial when needed. Disability insurance replaces a portion of your lost income if you become unable to perform your job because of injury or illness. Many companies offer disability insurance as an employee benefit, but typically it only covers 60 percent of base salary, minus taxes. Discuss whether you may need additional coverage with your financial planner.

Long Term Care Insurance - Seven in 10 people will need some type of long term care. There are two ways to pay for long term care - either out of your own pocket or with long term care insurance. Neither personal health insurance nor Medicare will cover many long term care expenses, as many of the needed services (bathing, dressing, and eating) are not medically necessary in nature. Medicaid is the government program that covers long term care expenses, but as the payer of last resort, you will not be eligible for Medicaid until you have nearly depleted all of your income and savings.

New Budget Law Means Changes to Your Social Security and Medicare Benefits

Social security is economic security for retired, disabled people or families of retired, disabled or diseased workers. Many people today are engulfed with promotions and invitation of benefits and security system seminars on how to maximize their social security income. On November 2nd, 2015 the president signed into law the, Bipartisan Budget Act of 2015 which has put an end to loopholes used in the past while filing forbenefits and made significant changes to the benefits system. Now what has changed according to new budget act?

The biggest change for claiming Social Security benefits is that the “File and Suspend” strategy has been abolished. Previously, married couples could maximize their Social Security benefits by having one spouse file for retirement benefits, then suspending the benefits shortly after filing. Typically, the person who is suspending the benefits is the individual who has had a higher earnings record. This strategy allowed married couples to file spousal benefits and receive higher benefits based on the lower income of the spouse.

Under the Bipartisan Budget Act, when a person files for suspension of benefits, not only does the individual not receive any benefits during the suspension period but, his or her spouse also does not receive any spousal benefits. Any current retirement benefits claims will not be affected, however the Bipartisan Budget Act will apply towards new file and suspend benefit claims.

Another benefit strategy that has been eliminated is using the process of restricted applications. This strategy is mainly used to increase the overall longevity of one’s Social Security benefits. When an individual reaches full retirement age and is eligible for both the spousal benefits and his or her own benefits, they can file a restricted application to only receive the spousal benefits. By doing so, they delay receiving their own retirement benefits in order to earn the delayed retirement credits. These delayed credits increase Social Security benefits by 8% a year.

Under the rules of the Bipartisan Budget Act; when you file for Social Security benefits, you are simultaneously filing for both your spousal benefits and your individual benefits. For those people who turn 62 after 2015, they will have two options for claiming their Social Security benefits; either they can start claiming benefits anytime at or after turning 62 and receive a lower total amount of benefits. Or they can delay receiving benefits until they are older, as late as 70, in order to maximize their benefit amount, but not receive any benefits until that time.

An additional benefit of the Bipartisan Budget Act is that it sets the premium rates for people who receive Medicare Part B coverage and there will not be an increase for most people in 2016. People who have their Medicare premiums deducted out of their Social Security benefits will not see an increase in rates for 2016. This is roughly 70% of Americans who are covered with Medicare Part B. However, the other 30% of people will see their premium rates rise from $104.90 to approximately $119 per month. This is due to the fact that there was no cost-ofliving increase, the premium increase is considered a relief for those people who fall
under the 30% category; otherwise they would have had to incur the full load of the Medicare increase, which would have been higher than 50%.

 


Sources
USA Today -
http://www.usatoday.com/story/money/columnist/powell/2015/11/12/socialsecurity-
medicare-changes-budget-law-retirement/75164246/

Loveland, Ohio magazine
http://lovelandmagazine.com/2015/11/the-bipartisan-budget-act-of-2015/

FedSmith
http://www.fedsmith.com/2015/11/02/bipartisan-budget-act-of-2015-signedinto-
law/

NBC News
http://www.nbcnews.com/politics/congress/house-passes-sweeping-two-yearbipartisan-
budget-deal-n453226

How much money will you need to retire?

Do you know how much money you need in order to retire?

The answer may surprise you!

Generally speaking, you will need about 70 percent of your pre-retirement salary
to live comfortably
. The percentages vary, somewhat, depending upon your situation
and what you plan to do after retirement.

Does your current retirement plan include:
• Travel?
• Building your dream home?
• Paying for health insurance?

According to the Social Security Administration, 9 out of 10 individuals over age 65
receive Social Security benefits. These are monthly cash payments made to retirees
who paid Social Security taxes (e.g. FICA) and earned at least 40 credits (10 years of
work). Actual benefits depend on lifetime earnings - more earnings, more benefits - as
well as retirement age.

However, the average Social Security monthly benefit payment leaves an enormous gap
to be filled with other sources of revenue. In 2010, most retirees reported that Social
Security made up only 37% of their expendable resources. The rest came from savings
and investments, post-retirement earnings, and pensions.

How Much Will My Pension Contribute?

If you are lucky enough to have a defined-benefit (DB) pension, it will definitely help your
bottom line. A DB pension - not to be confused with a 401k or other investment plan - is
a contract for a fixed sum to be paid regularly to a retiree or if the worker becomes
disabled. Both the employer and employee contribute to the pension fund. These
pensions are common for public employees, such as police officers, teachers and
firefighters.

Many workers with federal pension plans do not pay Social Security taxes while
contributing to their pensions. If any part of the pension is from work where Social
Security taxes were not paid, it could affect the amount of the Social Security benefit.

Whether Social Security benefits and/or DB pension payments are included in your
retirement plan, it is important to recognize a large shortfall may exist between income
and need. This shortfall may be filled with either savings and investments or earnings. If
you are not working now and saving for later, you may find yourself working after
retirement to make ends meet.

It is never too late to start planning for your retirement, but you should start now. Beacon
Financial Group is a financial planning firm with more than 20 years of experience.
Contact Beacon Financial Group for a complimentary financial consultation to
help identify your post-retirement income gaps and plan for a more secure future.

There is absolutely no cost or obligation.



Sources:
Fast Facts & Figures about Social Security, 2012. Publication No. 13-11785. Released:
August 2012
For more information, contact Beacon Financial Group to speak to an experienced,
licensed advisor: (888) 769-4333 or info@beaconfinancialgroup.net.

How to Maximize Your Pension Benefits

How to maximize your pension benefits. Pension maximization is an effective strategy for married individuals who are current participants in a pension plan. It helps them receive their maximum retirement benefit and guarantees their surviving spouse an income after their death.  

To understand how pension maximization could impact your retirement, consider this example:

You choose to receive $4,000 per month in your retirement and ensure that your spouse receives the same. Choosing this option would give you $1,000 less per month for your entire retirement - $12,000 less per year or $120,000 lost for every 10 years in retirement. Because people continue to live longer, you could live 30 years in retirement, costing you $360,000 if you fail to plan your pension properly.  

Selecting the life only option ($5,000 per month - the maximum available) for your monthly pension income may ensure you receive the highest amount available. You may use the extra income to purchase a life insurance policy so your spouse will be protected and receive tax-free income from the proceeds upon your death. If your spouse predeceases you, you continue to receive the highest monthly benefit and have the option to reassign your beneficiaries or cancel your life insurance.  

In either situation, both spouses are protected and can maximize the income provided by the pension. With pension maximization, you receive the maximum income from your pension and also help make sure your family is taken care of.  

One of the most important decisions you will face when you leave your job is deciding which pension option to choose. By making the right choice, you can maximize your income and preserve your surviving family’s financial security in the event of an unexpected death. Remember, the pension choice you make is IRREVOCABLE. Contact a Beacon Financial representative today to explore your options.  

 

*Example used as illustration only, not indicative of any particular situation, actual results will vary. Guarantees are based on the claims-paying ability of the issuer.


This information is general in nature and should not be relied upon for financial decision. As with any financial matters, please consult with your financial professional before taking any action.